HCC April-June net plunges; to sell stake in unit

HCC April-June net plunges; to sell stake in unit

Mumbai: Hindustan Construction Co on Thursday reported a 90% plunge in June-quarter net profit, hurt by higher interest rates and a slowdown in the infrastructure sector, sending its shares down nearly 5%.

The construction and civil engineering firm also said it plans to raise funds by selling stake in unit HCC Concessions.

The company’s quarterly interest costs surged to 932.5 million from 577.4 million a year ago.

Its net profit was a meagre 28.7 million compared with 283.1 million a year ago. Sales increased marginally to 10.6 billion from 10.08 billion.

At 2:09pm, its shares were down 3.23% at 31.5 in a weak Mumbai market.

On Tuesday, India’s central bank raised interest rates by a higher-than-expected 50 basis points, its 11th increase since March 2010.

Industry officials have said such aggressive hikes could hurt liquidity and increase cost of funds.

The sale of 14.5% stake in HCC Concessions to Xander Group, is expected to rake in 2.4 billion rupees. U.S.-based Xander is an investment firm focused on infrastructure hospitality, retail and real estate sectors.

The deal values HCC Concessions, which builds, finances and operates transport infrastructure, at $375 million, according to a statement from HCC.

The planned $436 million IPO of HCC’s unit township developer Lavasa Corp has been put on hold following its failure to get environmental clearance for a hill station project in the western Indian city of Pune.